Knowledge Center: Publication
Global trends in real estate investment6/16/2014
After years of drought, capital is flooding into real estate again. Investors beyond the largest private equity firms and REITs now have access to capital. Markets like New York, Hong Kong and London which rebounded the quickest from the financial crisis, remain robust — but the rising tide of investment capital has driven activity across the risk spectrum and across asset types.
Talent demands are tracking to these trends. For example, asset managers with development and construction knowledge are needed to direct building renovations that will command higher rents. Many of the attractive assets for investors in secondary and tertiary markets are opportunistic and value-add rather than core. As a result, a new, sleek glass façade, HVAC overhaul, a refurbished lobby or LEED certification may be necessary to make these buildings attractive to tenants. Transforming tired, out-of-date spaces into valuable assets requires far more than financial reporting expertise and deal-structuring experience.
Firms of all sizes are also hiring capital raisers for real estate. Two to three years ago, the capital markets were slammed shut for all but the largest GPs. Today, the market is slowly changing; smaller funds have been able to attract new capital—when they have demonstrated that they have unique investment strategies or strong track records, either on their own or partnering with placement agents. As a result, both funds and placement agents are in the market hiring new talent at all levels.
Globally, there is considerable interest in and demand for real estate in Europe, particularly from sovereign wealth funds and Asian capital. Investors see more opportunity — to purchase assets at lower prices relative to the quality of the real estate — than they do in many other markets. Their appetite for risk has risen as their search for value intensifies.
As a result, many firms are trying to figure out how to scale their business in Europe and the talent implications of their choices. One popular option, particularly for the big players, is to hire a team on the ground in Europe and send over a senior member of the organization as the lead. Sourcing the team leader from in-market in Europe is another possibility, as is acquiring a platform through merger or acquisition (M&A).
A quick scan shows these trends in real estate investment—and real estate hiring—developing across major markets in Europe, Asia, Latin America, the Middle East, and the United States.